Transparency

The most common definition offered for transparency is that it is the opposite of secrecy. In corporate communication, this means that transparency should provide a window into the decisions and operations of a corporation. The corporation is essentially laid bare before the public, opening itself up to public scrutiny and accountability. But as the amount of research on transparency has increased, many scholars question whether transparency has less to do with a lack of secrets and whether it is more about discovering the secrets for engaging the public without damaging the corporation’s reputation. Others criticize the emphasis of transparency research on disclosure or the dissemination of information, arguing that this one-dimensional, sender-centered approach disregards the importance of dialogue and engagement with the receivers of that information. As a two-sided window, transparency must be interactive to be effective. The question is who on the outside of the window should hold the organization to account—activist groups, the public, or the government.

Despite these concerns, transparency remains a hallowed ideal for corporate communication. Although the term is not new, it gained new traction in the late 1990s and early 2000s after several corporate scandals rocked the country. It has remained relevant with the growth of the Internet, the increasing partisan polarization in politics, and the expanding partisan debate, criticism, and commentary. Social media also has fueled calls for more transparency. Organizations must respond quickly or face the possibility that biased and inaccurate information goes viral and creates trust deficiencies that may take years to overcome. History has shown that public distrust of the private and public sectors only increases calls for transparency.

This entry first examines transparency’s historical antecedents, contemporary meanings and interpretations, strengths and weaknesses, and dangers and perils. It then discusses the need for a greater emphasis on theory in transparency research, particularly an ethics theory that recognizes the importance of good will, freedom, moral autonomy, and duty.

Historical Antecedents

In the late 1890s and early 1900s, a time period known as the Progressive Era, reformers in politics, business, and the press advocated transparency in government and business. At that time, they referred to transparency as publicity. They believed that focusing public attention on government corruption and corporate malfeasance would mobilize public opinion and lead to more public accountability and reform. Corporate leaders soon came to realize that the press and public, once informed, would demand greater morality and responsibility. Publicity would shed light on corporate wrongdoing and act as a moral disinfectant, cleansing business and politics and reminding corporate and political leaders of their social and moral responsibilities.

A century later, the same characteristics have been associated with transparency. The common assumption is that transparency will open corporations up to public inspection, increase trust and accountability, and ensure corporate social responsibility (CSR). In particular, corporate communication scholars now associate transparency with reputation, public trust, relationships, and two-way symmetrical communication. They call for a dynamic form of transparency in which organizations engage stakeholders to determine what the public needs to know and the public’s response to corporate actions. More recently, however, researchers have echoed critiques of publicity a century earlier and have questioned whether transparency increases openness or simply serves as a strategic ruse to give the appearance of openness, honesty, and social responsibility.

Popular public relations communication models have long emphasized the importance of public engagement, going so far as to argue that the dissemination of information is insufficient for effective and ethical communication. Thus, public relations scholars tend to examine transparency through the lens of two-way symmetrical communication and relationships. With dialogic communication as the ideal, openness means more than simply information sharing. Scholars have been quick to dismiss information as disclosure and not transparency. Transparency or openness has been considered a critical component in developing organizational public relationships. Transparency should also increase accountability and collaboration.

One measure of corporate transparency showed that from the organizational reputation standpoint, transparency means integrity and respect as well as openness. In terms of communication, transparency means participation, substantial information, accountability, and the absence of secrecy. This was consistent with other research that identified the dimensions of transparency as information, participation, and accountability.

Perspectives on Transparency

Public relations practitioners see themselves as a corporate conscience, playing a mediating role in providing information and responding to public scrutiny and criticism. Indeed, most business disciplines view transparency in a positive light or at least take a neutral position with regard to the term. One study found that most research views transparency as an ethical approach to communicating corporate decisions and actions, including CSR. Other research argues that transparency contributes to the efficiency and effectiveness of organizations. Some research views transparency as serving a democratic function that encourages discussion and dialogue and develops relationships. Another aspect of transparency stems from legal and regulatory requirements. The final argument in favor of transparency focuses on how being open contributes to the bottom line.

There has been little discussion in the research with regard to theory. Some researchers have tried to apply systems theory, while others tried to adapt theoretical models from their individual disciplines, such as the public relations emphasis on relationships and dialogic communication. The tendency for scholars to incorporate theoretical models from their own disciplines hinders progress toward a more coherent and consistent approach to transparency research. One researcher suggested that corporate communication scholars incorporate theories from sociology. The lack of theory may speak to the fact that transparency research is still a relatively new area of research.

Researchers generally agree that simply providing information does not constitute transparency. In one case, researchers found that the organization’s dissemination of information in a crisis situation actually made matters worse and hurt the reputation of the company. The release of information overlooks the need of the public to interpret and evaluate what happened. Organizations cannot assume that their intended message will be the one received by the audience. The receivers see the situation from their individual perspectives. Increased access to information may not be seen by stakeholders as transparency if stakeholders lose trust in the communicator.

The social nature of transparency means that what one party perceives as openness and accountability, others may interpret as closure and manipulation. Ironically, an obvious example of transparency going awry occurs in CSR reporting. As corporate reporting becomes institutionalized, it becomes more controlled. Corporations tend to emphasize the tangible things they do, while withholding information about the social and political consequences of their actions. Financial considerations also can limit the amount and the applicability of the information. There is also a moral concern regarding the corporation’s freedom to act without public scrutiny of proprietary practices and knowledge. The demands for transparency could ultimately undermine their ultimate goal of honesty, openness, and integrity by causing corporations to meet only minimal standards of CSR.

If the early research regarding transparency was overly positive, recent research tends to view the concept more skeptically. Corporations are more concerned about the quality of the communication they provide than about viewing transparency as a process of engagement and discussion. CSR reporting then becomes a defensive mechanism to appease activists and dissident stakeholders. As CSR reporting becomes more institutionalized, the public is more likely to take these activities for granted and disengage from the conversation about the quality and authenticity of the reports.

Despite these concerns, transparency plays a critical role in effective CSR. It allows consumers to value the company’s good deeds as well as its products. Being a good corporate citizen can inspire innovation and efficiency and allows an organization to distinguish itself from the crowd. Transparency also serves the moral purpose of enhancing consumer freedom and respecting consumers’ rights as rational beings and citizens.

Some researchers call for government to institute CSR reporting in the same way it mandates financial reporting. But others are more skeptical about government intervention. Government involvement can cause the public to place too much trust in auditing agencies, which often have conflicts of interest and little oversight. One study claimed that audits, whether financial or informational, undermine the democratic process of participation and engagement by leaving decisions to experts. In other words, institutionalizing transparency could actually undermine transparency by closing the process to outside critique and scrutiny.

Recent research also questions the validity of transparency as a social ideal. Making transparency a social process fails to consider the strengths and weaknesses of communication and the myriad practices that constitute transparency. In other words, transparency produces positive and negative outcomes. Transparency is not without its dangers and perils, and the public should accept that transparency has the power to produce light and darkness. Some researchers have gone so far as to call transparency a myth that simply gives the impression of openness and honesty. This is especially true when transparency focuses more on the sender than on the receiver. Transparency metaphors such as openness, light, and purification serve to reinforce the myth. Ironically, the transparency myth echoes the publicity myth of the Progressive Era. The publicity myth self-destructed as a result of the success of publicity and propaganda influencing public opinion during World War I. The subsequent public backlash transformed publicity into a strategic tool used by public relations professionals to promote client organizations and influence public opinion.

The relationship between modern-day transparency and Progressive Era publicity is reflected in the evolution of transparency from a moral obligation into a strategic weapon. Instead of engaging the public, it lures the public into complacency. This is especially apparent in the public’s growing reliance on intermediaries to hold organizations accountable. The paradox emerges in an organization’s transparency efforts translating into more opacity. Indeed, researchers cited the popular public relations practice of running carefully crafted messages and communications through one spokesperson or official. That official may also engage the public but only under the terms and conditions established by the organization, thus giving the perception of openness and engagement when in fact adhering to a controlled and carefully edited script.

Risks

Two decades of transparency research indicate that the initial euphoria over the practical and moral value of transparency has been tempered by a realization of its potential perils. Government efforts to increase corporate transparency fail to solve the problem because regulation creates a pseudotransparency that reveals what is required and little more. There are other dangers in simply relying on activist groups, partisan bloggers, and other nongovernmental organizations to monitor corporate transparency. This approach disengages the public and turns transparency into a game of cat and mouse.

Systems theory has been offered as a theoretical model for transparency because it relies on boundary spanners, throughput, and feedback to help organizations adjust and adapt to their environment and maintain a steady state. But this kind of strategic approach to transparency would likely reinforce the problems identified by those who called transparency more of a myth than a reality. It also would undermine transparency as an ethical ideal. The criticism of transparency arises from the paradox that transparency can shed more light on corporate decisions and actions but can also be used to create more opacity. The solution to the paradox may lie in transparency’s limitations. Maybe too much is expected. Corporations have freedom too. They may limit communication and engagement as long as they are transparent as to the reasons for their opacity. Honest communication may be of more value to stakeholders than the quantity of communication.

Communication values of honesty and sincerity should serve as the ethical foundation for corporate transparency, but there is still a need for a guiding theory. Regardless of the practical benefits of transparency, at its core, it is an ethical value. Several ethics theories could provide a theoretical foundation for corporate transparency. In particular, the underlying moral premises of transparency reflect the moral philosophy of Immanuel Kant. Corporations should consider Kant’s categorical imperative, his conception of good will, his mandate to treat people as ends, and his recognition of an obligation to advance the interests of other rational beings. A moral imperative for transparency would emphasize the moral autonomy and responsibility of corporate leaders as well as recognize the moral autonomy and responsibility of stakeholders, be they consumers, employees, activists, or community members. With all parties acting with the intelligent goodwill associated with Kantian duty ethics, transparency would likely offer more light than darkness, and there’s always a need for more light.